The Parade of the Bankers' New Clothes Continues: 23 Flawed Claims Debunked

The debate on banking regulation has been dominated by flawed and misleading claims. The title of our book The Bankers New Clothes: What's Wrong with Banking and What to Do about It (Princeton University Press, 2013, see bankersnewclothes.com) refers to flawed claims about banking and banking regulation, and the book discusses and debunks many of them. Flawed claims are still made in the policy debate, particularly in the context of proposals that banks be funded with more equity and rely less on borrowing than current or new regulations would allow. Those who make the flawed claims do so without addressing our arguments, even when they comment on the book or on our earlier writings. Because the financial system continues to be dangerous and distorted, however, flawed claims must not win the policy debate. This document provides a brief account of claims that we have come across since the book was published in February, 2013. We provide brief responses, with references to more detailed discussions in the book and elsewhere. Nothing that we heard or read changes our conclusions or our strong policy recommendations.